CORRUPTION, POVERTY AND ECONOMIC PERFORMANCE: EASTERN EUROPE AND CENTRAL ASIA CASE

Yıl 2015, Cilt: 7 Sayı: 2, 27 - 41, 01.12.2015

Mustafa Ildırar Erhan Iscan

Öz

Corruption, defined as “the misuse of public power for private benefit.” The
World Bank describes corruption as one of the greatest obstacles to economic and
social development. It undermines development by distorting the rule of law and
weakening the institutional foundation on which economic performance depends.
In past decades, many theoretical and empirical studies have presented corruption
hinders investment, reduces economic growth, restricts trade, distorts government
expenditures and strengthens the underground economy. In addition, they have
shown a strong connection between corruption and poverty and income
inequality. On the other hand, the literature on corruption points to the conclusion
that corruption by itself does not lead to poverty. Rather, corruption has direct
consequences on economic and governance factors, intermediaries that in turn
produce poverty. Although corruption is seen in many countries in the world, it is
higher and widespread in developing countries. This study investigates relation
between corruption, poverty, and economic performance by using a panel
consisting of countries in the Eastern Europe and Central Asia countries. It was
shown that corruption affected directly economic performance and low economic
performance leads to poverty. Additionally, results imply that rules against
corruption could affect economic growth indirectly through their impact on the
level of corruption.

Anahtar Kelimeler

Corruption, Poverty, Development, ECA Countries

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